This article was originally published in Chinese on Momentum Works’s Chinese channel, translated into English by Yusuf and Nurina of the Momentum Works team her

Recently, the Ministry of Electronics and Information Technology of India announced that 59 Chinese apps including WeChat and UC browser will be permanently banned in June this year. If this measure is implemented by then, this will be the fourth time India has banned Chinese apps since India did the same first in June last year, but this time it has changed from the previous ban to a permanent ban.

On the one side, there are officially confirmed cases of over tens of millions, which may actually be hundreds of millions, and non-stop protests by farmers (on yesterday which is India’s Republic Day, not only was there no usual celebration of motorcycles, but even the Red Fort in Delhi was occupied by farmers driving tractors). On the other side is a heavy attack on foreign companies, including China. India seems to be moving away from the “next China” that many people think of.

India is an extremely complex market. I used to work in India for a period of time from 2010 to 2011, mainly dealing with the government. At that time, there were peacocks, wild boars, and donkeys downstairs in the Gurgaon office building. If you are lucky (unfortunately), you can see snakes. Once I went to see a permanent secretary (the highest-ranking civil servant) in a suit and leather shoes. I was stuck on the road for two hours. The air conditioner of the classic Ambassador car I was riding in did not work at 48 degrees Celsius outside, and the wind came on me. The driver in front kept telling me “Don’t worry, I am super fast.” while shaking his head.

In 2016, many Chinese friends started to ask about India. I wrote an article analyzing and judging the opportunities of the internet in India. At that time, many of our familiar Chinese background startups had not yet entered India, such as TikTok. At that time, Chinese investors who went to India for inspections were in an endless stream.

My opinion at the time was that India, with its 1.3 billion people, was not the China of 10 years ago. It requires rational analysis to better grasp the opportunities in India. Behind all kinds of data and stories, there are still many uncertain factors in this market. Especially the issue of employment, talent, and internet penetration. The last problem has been basically solved by Jio of Ambani, the prime minister’s fellow, and richest man. But Ambani’s ambition is far more than just being an operator. He wants to keep the entire eCommerce Internet opportunity in his home. Both Bezos and Zach Burke were helpless, one struggling, and the other obediently offering.

It can be seen that it is not only Chinese investors and entrepreneurs who suffer.

Here, I am resharing an article I wrote in 2016 when cross border investment into India was just starting to gain momentum: 

How big is the opportunity for the Indian Internet?


The actual situation, opportunities, and challenges of the Indian market

The Indian Internet investment market, which has been silent for many years, reported frequent successes last year. In 2015, the total financing amount exceeded US$4 billion. Sequoia Capital, Matrix Partners, Tiger Fund, etc. are all actively targeting the Indian market. Alibaba and Softbank led the investment in India’s second-largest e-commerce company Snapdeal with USD 500 million, Ant Financial acquired 40% of the e-wallet and payment platform Paytm for USD 680 million, and Tencent led the investment in Practo, a medical service information platform for USD 90 million. The market has seen the pattern and capabilities of Chinese capital.

Is this an overheated market?

Some indicators of India are really exciting. In 2015, India’s economy achieved 7.5% growth, surpassing China’s 6.9%. The median age of 1.3 billion people is 27 years old — 10 years younger than China; nearly 60 million of them are between 17-24 years old, and the demographic dividend has huge potential — just like China 10 years ago .

There are currently about 300 million smartphones in use in India-expected to reach 750 million by 2020. Facebook currently has 133 million registered users and 64 million daily active users in India; online game users reach 185 million; online video users exceed 100 million; 50 million people have already enjoyed the convenience of e-commerce through various platforms; and Ola, the largest in India The taxi-hailing app has 20 million registered users.

However, behind these exciting numbers, what kind of market are we facing? Will the Indian market really take off as China did a few years ago?

Differences between India and China

Although we often say that India’s internet as a whole is 5-10 years behind China, it does not mean that India is China 5-10 years ago. The national conditions of these two countries are actually quite different.

First of all, India is a political system that combines federalism and democracy. In addition to the complexity of ethnicity, caste system, language, and religion, government decision-making processes are often lengthy and many policies cannot be implemented in the end. There have been situations in the capital before: the central government, the Delhi state government, and the Delhi city government are governed by three different political parties. As a result, it has been difficult to implement any governance plan for several years

In addition, the influence of the planned economic policy at the beginning of India’s independence is still there. For example, due to policy restrictions, Indian retail is still dominated by mom&pop stores, and there are almost no large supermarkets and convenience stores that bloom all over China.

While Chinese logistics companies complain about the high highway tolls, their Indian counterparts spend a quarter of their working time queuing up on the state-state border to pay the transit tax. While the value of the renminbi is relatively stable, the Indian rupee has depreciated by more than 30% in the past five years.

The differences between China and India are also reflected in product design and operation promotion. China uses the same letter and language from Harbin, the capital of the northernmost province, to Haikou, the capital of the southernmost province; India has more than 20 official languages ​​recognized by countries, and no more than 10% of the total population can speak English. The Daily Hunt (India The version of “Jin Ri Tou Tiao”) requires 12 languages ​​to meet people’s needs for news.

In addition, in order to truly take off like China, India still has three very basic and practical problems to be solved: employment problem; talent problem; mobile network coverage.

  1. Employment problem

First of all, everyone knows the basic principles of economics: there are jobs to have income, and income promotes the growth of consumption power. The International Labor Organization estimates that in the five years from 2015 to 2020, India’s working population will grow from 511 million to 553 million. This means that India needs to add more than 8 million job opportunities every year to meet the job demand of 42 million people that has grown in five years.

What is the actual situation? According to the latest employment statistics of the Federal Government Labor Bureau and the Statistics Bureau in April: the eight industries that are the backbone of the economy created a total of 135,000 jobs in 2015-the lowest point since 2009. One example that best reflects the current job market is the advertisement of a state government recruiting office assistant last year-a a total of 2.3 million people submitted applications, including many university graduates.

But perhaps we have already seen the light. Since Prime Minister Modi’s national strategy for Make In India (Made in India) was launched in September 2014, it has attracted more than 63 billion U.S. dollars in foreign investment in 2015. Due to land acquisition, technical facilities and government approvals are much slower than in China, many investments have not been converted into employment. There should be results in the next two to three years.

2. Talent problem

Related to employment is human capital. You may have noticed the influence of Indians in the United States: For example, the CEOs of Google and Microsoft, and many senior executives of major technology companies are from India. Silicon Valley is a double-edged sword for India: on the one hand, it has allowed India to be closely connected with the world’s foremost Internet giants, but on the other hand, it has also attracted many Indian talents. Although some people have returned in recent years, India’s environment, transportation, taxation, and other issues still make many high-end talents decide to stay overseas.

In addition, for some business models that focus on operations, basic level marketing, operations, customer service, and logistics departments are all facing recruitment problems. “Employee turnover is very frequent,” a friend in charge of customer service on a large apparel e-commerce platform told me. She spends almost half of her time every day on recruitment and interviews. Another friend is the general manager of a taxi-hailing software in a big city. The most troublesome thing for him is the quality of the drivers. “Many drivers still don’t know how to use GPS navigation after training many times.” He looked helpless.

This issue relates to the entire education system in India. While China’s nine-year compulsory education has become quite popular, the illiteracy rate in India is as high as 25%. According to government statistics, less than 40% of school-age teenagers graduated from junior high school in 2015, and less than 10% of the working population participated in on-the-job training (China’s 90%), the government, many social enterprises, and charities are working hard to solve this problem but it will take time.

3.Mobil network coverage problem

Do 300 million smartphones represent so many mobile Internet users?

Not really. Among the 300 million smartphones in India, less than half have network links. The seven mobile communication operators are unwilling to make great efforts in infrastructure construction. The government also refused Facebook to provide free mobile networks in India based on the principle of net neutrality. The result is that most places outside the metropolis have no data networks. This also explains why 41% of smartphone users in India are concentrated in eight major cities. And the network coverage in big cities is also problematic-in many places in the center of Bangalore, the iPhone 6SPlus in standby mode can run out of battery in half a day due to constantly looking for signals.

In other words, the actual mobile Internet penetration rate is much lower than the growth of smartphone sales. And this situation is not expected to change much in the short term.

The first part of this article summarizes the actual situation of the Indian Internet market. We mentioned the employment problem, the talent problem, and the key issue-mobile Internet coverage. These problems make the Indian market look very difficult. Does that mean Is there no chance in this market? totally not! Despite many challenges and structural issues, there are still plenty of opportunities in the Indian market

How to seize the existing opportunities?

A very promising market

We estimate that currently there are only 50 million people in India with e-commerce spending power, and it may only reach 100 million in three years. But this is still a big market and not just e-commerce, there are many other needs that can be met through the advantages of the Internet. Parents in India use and to help their children go on a blind date; Credit Mantri helps those who have never had a bank account to obtain and upgrade their credit scores so that they can apply for personal loans; Toppr makes their own online education for high school review/remediation Content, has accumulated 500,000 courseware and one million monthly active users.

I often discuss the Indian market with Jatin Detwani, a classmate of INSEAD and a good friend. Detwani from Delhi is now the CFO of Rocket Internet Asia. He believes that there are many opportunities for the Internet to transform the country’s annual cash transactions of 500 billion US dollars.

Many investors are also aware of the overheating of the market in the past year. This year, many large start-up companies generally encountered financing difficulties, and some even had their valuations lowered. It is a good thing for investors to realize the existence of the bubble and return to rationality. I have a good friend who is the co-founder of a fresh food distribution platform. He said that the previous market expenses and the allocation of customer service staff seem to grow without limits. This year, there is unprecedented pressure to improve efficiency. The entire management team is constantly thinking and improving.

Detwani believes that in the next year or two we will see the integration of many homogenized companies. “After all, hundreds of millions or even billions of dollars have been invested in it. Instead of continuing to burn money to compete, a more secure strategy for investors is to promote Mergers and integrations within the industry.” Friends in the Chinese market should be familiar with this phenomenon.

At the same time, many hard-working teams in the market that were working silently before have begun to attract people’s attention. Carpathy, a small team of three people, is committed to standardizing the process of automotive after-sales service. In the absence of any financing, they have established a complete set of quality processes and rolled out a complete network in the Delhi Capital Region. And The Man Company created a high-end men’s skin care brand based entirely on Internet promotion and sales to fill the gap between local low-end brands and imported luxury brands.

“After all, we have a lot of problems to solve, a lot of vacancies to fill – and we also have a lot of high-quality and determined entrepreneurs to solve these problems”, Detwani is very confident.

In addition, like Southeast Asia, India has not yet formed an Internet giant like Alibaba or Tencent, and the side selection has not yet become so important. Moreover, the Internet investment circle is actually very small—probably less than 150 people—and many large VCs invest in the same project together, which directly disperses or even eliminates the risk of betting the wrong chips.

In addition, like Southeast Asia, India has not yet formed an Internet giant like Alibaba or Tencent, and side selection has not yet become so important. Moreover, the Internet investment circle is actually very small—probably less than 150 people—and many large VCs invest in the same project together, which directly disperses or even eliminates the risk of betting the wrong chips.

For outsiders, due to language, close ties with Silicon Valley, and other reasons-India does not have its own system in many areas like China: Amazon’s market share is almost the same as Snapdeal, and it is still Continue to spend money to expand; Tinder is India’s largest dating app, and Whatsapp has far more active users than WeChat and Viber. In particular, Modi, who had been in power in Gujarat State with great economic success, was elected as the Prime Minister of the Federal Government in 2014, and policy restrictions have gradually opened up. Now foreign investors can fully own the e-commerce platform of the Marketplace category; India’s largest e-commerce platform Flipkart even registered the company in Singapore.

China experience and exchange/investment opportunities

Although India’s national conditions are very different from China, the Indian market is generally aware that the road China has traveled over the years has provided them with valuable experience. We have also seen that many models are copied, or at least refer to similar models in China. Including the Indian version of Today’s headline mentioned above-Daily Hunt, as well as Wooplr, which almost completely copied the Mogujie model, and so on. Every time I discuss any business model or investment opportunity with friends in India, they almost always ask “How is China’s development in this area?”

Recently, Nexus, Accel, and other major Indian venture capital institutions have brought their companies to China to raise funds and learn. Even Kalaari Capital, which has almost never dealt with China, will be personally led by Managing Director Vani Kola to visit China in June. In the next few years, the exchanges between the two countries in the Internet field will definitely become closer. Momentum Works is also planning to organize interested investors to visit India in the second half of this year so that they can experience the potential opportunities firsthand.

In general, as long as you understand the actual situation, real opportunities, and challenges in this market, there will be a lot of potentials to be explored.


A few weeks ago, I was looking for a tuk-tuk on the streets of Delhi. The driver parked on the side of the road was watching the video with a mobile phone with relish. I was shocked by tapping my shoulder. I asked him if he was watching with 4G data traffic-he said of course, watching Bollywood singing and dancing, the free time is far less boring, and you can watch the live broadcast during the cricket match.

It’s a pity that I can’t give a reward yet.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].